A construction firm with ties to the Chinese government was awarded a $123 million state contract to rebuild portions of the Pulaski Skyway last month, drawing challenge from the runner-up who says the contract should be tossed because of the countryâs financial interest in Iran.
Star-Ledger File Photo

TRENTON — A construction firm with ties to the Chinese government was awarded a $123 million state contract this month to rebuild parts of the Pulaski Skyway, drawing a series of challenges from a losing bidder who contends that China’s financial interest in Iran should disqualify the firm from public contracts.

Hoping to isolate the Middle East nation, state lawmakers passed a law last year barring companies with a financial interest in Iran’s energy sector from getting public contracts in New Jersey. New York, California and Florida have passed similar bans.

The rival contractor, the South Plainfield-based Conti Enterprises, argues in a legal challenge that the parent company of the award winner — CCA Civil — counts as one of its partners China National Petroleum, a state-owned company that is among 41 firms on the state’s banned list.

More broadly, Conti, the runner-up in the bids, also raised concerns about any state-owned Chinese company getting public contracts, given the country’s financial ties to Iran.

CCA Civil is a division of China Construction America, the U.S. arm of state-owned China State Construction Engineering Corp., one of the largest Chinese building companies. Earlier this month, New Jersey’s Department of Transportation awarded the firm a contract to upgrade the 3-mile bridge.

In legal briefs and filings to the Department of Transportation, CCA Civil denied claims that it is directly owned and controlled by the Chinese government or that it has any corporate links to companies with investments in Iran. The company argues that Conti is a sore loser that has resorted to “China bashing” to overturn the award.

Lawyers for CCA argue that the implications of Conti’s argument is “that each and every business that is directly or indirectly owned by the Chinese government is barred from government contracting.” Only Congress can enact such restrictions or empower states to do the same, the lawyers wrote.

Officials from Conti and CCA did not return calls for comment yesterday on the legal fight, which was first reported by the Wall Street Journal.

State officials have agreed with the Chinese firm, denying Conti’s request in administrative rulings and successfully beating back the company’s motions to put a temporary hold on the contract in state appeals court. Among other things, state officials say Conti has not proven CCA Civil is “under common ownership or control” of a company with financial interests in Iran.

CCA Civil does not appear on the state’s banned list and the company’s CEO signed a certification that neither its company nor its parent company have any financial interest in Iran’s energy sector, the company argued in court papers.

After losing a motion to put a hold on the contract, Conti has now asked an appellate judge to expedite the case.

CCA Civil has worked on other major public projects in the region. The company, based in Jersey City, is part of a joint venture rebuilding the Alexander Hamilton Bridge between Manhattan and the Bronx, and is one of the bidders vying to rebuild the Central Terminal Building at La Guardia Airport. The company has worked on New York City’s No. 7 subway line extension and constructed platforms for the train station at the new Yankee Stadium.

The dispute could be a sign of things to come, experts say.

Jacques deLisle, a professor of international law and director of Center for East Asian studies at the University of Pennsylvania, said China has far fewer restrictions on companies that want to do business in “problematic” countries like Iran, a fact that will generate more scrutiny as Chinese companies expand in the United States. “You are going to see more and more of these issues coming up,” he said.

DeLisle said many Chinese construction companies are state-linked, if not wholly state-owned, and have a complicated corporate structure. “It would not be surprising to see one entity in these corporations with links to one of these problematic countries,” he said.

DeLisle said the Chinese companies are smart enough to insulate themselves from challenges like the one Conti leveled, saying just merely connecting dots on corporate relationships doesn’t prove that one company “owns” or “controls” another.

Assemblyman John McKeon (D-Essex), the prime sponsor of the Iran sanction bill, said he was not intimately familiar with the Conti case, but said the law was clear that the ban applied to subsidiaries of company’s with ties to Iran.

“I would be disappointed if the state is not living up to the spirit of the law, but that’s what the courts are for,” McKeon said. “If you have an affiliation with a company that has ties to Iran, then you can’t get a contract.”

McKeon said he believes the ban should be applied more broadly, prohibiting any company that is partially or wholly owned by China from getting a public contract.
“Given the regime in China and its ties to Iran, it’s a more direct relationship,” McKeon said. “They should not be getting contracts.”